The Great Recession officially ended 10 years ago this month, and the jobs market started gaining momentum in 2010.
Since then, the total numbers of jobs has only increased, month after month. The monthly winning streak for jobs set a new record during the Obama administration and has kept going, now standing at an improbable 104 months.
We are now just weeks from breaking the record for the longest uninterrupted stretch of economic growth, too, at least since such things have been written down.
But will this feel like a record worth celebrating? The best answer might be “it depends.”
A lot of analysis of what’s going on starts with the averages, and as of the last census report, inflation-adjusted incomes for the median household — half higher, half lower — were within a few dollars of peaks reached in 1999 and in 2007. Given the fierceness of the economic storm, to be back to old highs in household income feels like a win.
Housing values have generally recovered, and 401(k) account balances likely caught and then surged past the 2007 totals as the major stock indexes shot past their pre-recession highs and climbed to records.
Not everybody recovered as well as the overall economy did, of course, and one paper that clearly outlined that reality is a research note from last fall from some Federal Reserve economists.
Even the methodology authors Lisa Dettling, Joanne Hsu and Elizabeth Llanes used to sort the data said a lot about how unevenly American wealth is distributed. They sliced their numbers into the top 10% of households by what they called “usual income” and then divided the remaining 90% into three equal groups.
Back in 2007 the top 10% of households had 45 times as much wealth as the bottom 30%. If that seems hard to believe, as of the authors’ most recent data the top 10 percent’s wealth had shot up to 72 times what the bottom 30% of households had.
In 2016, seven years into the recovery, people in all three groups in the bottom 90% had less on average than in 2007, and down roughly one-third for the bottom 60%. The top 10%, on the other hand, was richer.
One part of the story of why the household wealth of lower-income people hadn’t recovered is that people in this group no longer owned their own homes at nearly the same rate as they did a dozen years ago. Obviously, a recovery in housing values won’t do much for personal net worth if you are now renting.
This is the kind of analysis that seems to explain one of the most fascinating developments as this historically long-lived economic expansion chugs along. That’s how the only brick-and-mortar retail segment that seems to be thriving is dollar stores.
I’m far from the only business writer to have realized just how interesting this story is, with another in-depth article just published by Fortune under the headline “Making billions at the dollar store.” The Fortune piece focused on the remarkable growth of Tennessee-based Dollar General, which has just about doubled its total number of stores since 2008, to about 15,600 as of last count.
Dollar stores aren’t all the same, and they don’t really sell everything for one dollar or less. But what they do sell, the household goods, packaged food, personal care items and other things, mostly falls under the heading of things a family can’t really do without.
As a retail concept it’s not new, but dollar stores did well in the Great Recession as American consumers who were under the gun financially traded down in their shopping.
The same-store sales of Dollar Tree, another of the segment’s leaders, increased 7.2% in the grim year of 2009. Among other retailers, even low-price leader Walmart’s same-store sales in the United States actually slipped that year. And then as the economy started to grow again and the job market started to improve, the dollar stores continued to thrive.
One thing that’s interesting about the dollar stores’ approach is that the core customer they are going after isn’t the same as a Walmart’s or Costco’s, which seem like good places to shop for families who are hoping to stretch a dollar. The typical Walmart customer is much better off.
A 2017 piece by Bloomberg described a presentation for investors in which a Dollar General executive explained how Dollar General thought of its customer segments, including its most loyal customers, called BFFs, for best friend forever. A BFF led a household of less than $35,000 in annual income and often relied on government assistance to make it through the month.
A middle-class shopper might notice that the family is almost out of ketchup and then order a few bottles, the company’s CEO told the Wall Street Journal, trying to explain how the Dollar General customer really lives. His core customer, he continued, knows that the family used the last of what it had last evening and picks up a single bottle on the way home from work.
“The economy is continuing to create more of our core customer,” the CEO, Todd Vasos, also told the Journal.
Many of the dollar stores are in rural areas, serving communities too small for a Walmart. Bloomberg interviewed a Cushman & Wakefield retail research director who explained that he had discovered dollar stores while looking for bright spots in a brick-and-mortar retailing landscape characterized by unprecedented store closures. For a five-year stretch, and in a growing economy, more than five new dollar stores had been opening each day.
“Essentially what the dollar stores are betting on in a large way is that we are going to have a permanent underclass in America,” Cushman’s research vice president, Garrick Brown, told Bloomberg. “It’s based on the concept that the jobs went away, and the jobs are never coming back, and that things aren’t going to get better in any of these places.”
Next month, when our economy’s growth streak almost certainly hits 10 years and a month and sets a new record for the nation’s longest economic expansion, it’s doubtful the BFFs of Dollar General will be finding much to celebrate.